10-Q 1 sdp-10q_03312001.txt QUARTERLY REPORT U.S. Securities and Exchange Commission Washington, D.C. 20549 Form 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended: March 31, 2001 Commission file no.: 000-26021 S D Products Corp. ------------------------------------------------------------ (Name of Small Business Issuer in its Charter) Florida 65-0790763 ------------------------------------ ----------------------- (State or other jurisdiction of (I.R.S.Employer incorporation or organization) Identification No.) 1506 Briarhill Lane N.E. Atlanta, GA 30324 ------------------------------------------ ----------------------- (Address of principal executive offices) (Zip Code) Issuer's telephone number: (404) 321-1192 Securities registered under Section 12(b) of the Act: Title of each class Name of each exchange on which registered None None ----------------------------------- --------------------------- Securities registered under Section 12(g) of the Act: Common Stock, $.0001 par value per share -------------------------------------------------------- (Title of class) Copies of Communications Sent to: Donald F. Mintmire Mintmire & Associates 265 Sunrise Avenue, Suite 204 Palm Beach, FL 33480 Tel: (561) 832-5696 - Fax: (561) 659-5371 Indicate by Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- As of March 31, 2001, there are 2,800,000 shares of voting stock of the registrant issued and outstanding. PART I Item 1. Financial Statements INDEX TO FINANCIAL STATEMENTS Balance Sheets...............................................................F-2 Statements of Operations.....................................................F-3 Statements of Stockholders' Equity...........................................F-4 Statements of Cash Flows.....................................................F-5 Notes to Financial Statements................................................F-6 F-1

The accompanying notes are an integral part of the financial statements F-2

The accompanying notes are an integral part of the financial statements F-3

The accompanying notes are an integral part of the financial statements F-4

The accompanying notes are an integral part of the financial statements F-5 SD Products Corporation (A Development Stage Enterprise) Notes to Financial Statements (Unaudited) (1) Summary of Significant Accounting Principles TheCompany SD Products Corporation is a Florida chartered development stage corporation which conducts business from its headquarters in Atlanta, Georgia. The Company was incorporated on October 20, 1997. The Company has not yet engaged in its expected operations. The Company's future operations will be to provide automobile leasing for various consumer groups. Current activities include raising additional equity and negotiating with potential key personnel and facilities. There is no assurance that any benefit will result from such activities. The Company will not receive any operating revenues until the commencement of operations, but will nevertheless continue to incur expenses until then. The following summarize the more significant accounting and reporting policies and practices of the Company: a) Start-up costs Costs of start-up activities, including organization costs, are expensed as incurred, in accordance with Statement of Position (SOP) 98-5. b) Net loss per share Basic is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. c) Use of estimates In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and revenues and expenses for the period then ended. Actual results may differ significantly from those estimates. d) Interim financial statements The financial statements for the six months ended March 31, 2001 and 2000 and for the period since October 20, 1997, (Inception), through March 31, 2001, include all adjustments which in the opinion of management are necessary for fair presentation, and such adjustments are of a normal and recurring nature. (2) Loan Receivable The Company authorized a loan in the amount of $6,000 to a related party at the rate of 9% per year, payable on demand. Interest of $747 was accrued at March 31, 2001. (3) Stockholders' Equity The Company has authorized 50,000,000 shares of $0.0001 par value common stock and 10,000,000 shares of $0.0001 par value preferred stock. Rights and privileges of the preferred stock are to be determined by the Board of Directors prior to issuance. The Company had 2,800,000 shares of common stock and 0 shares of preferred stock issued and outstanding at December 31, 1999. The Company, on October 20, 1997, issued 2,000,000 shares to its sole Officer and Director for the value of services rendered in connection with the organization of the Company. On the same date, the Company issued 100,000 shares for the value of consulting services rendered in connection with the organization of the Company. In April 1998, the Company issued 300,000 shares of common stock at $0.01 per share for $3,000 in cash. In June 1998, the Company issued 400,000 shares of common stock at $0.05 per share for $20,000 in cash. (4) Income Taxes Deferred income taxes (benefits) are provided for certain income and expenses which are recognized in different periods for tax and financial reporting purposes. The Company has net operating loss carry- forwards for income tax purposes of approximately $4,300, $6,000, $4,400 and $6,500 expiring at September 30, 2021, 2020, 2019 and 2018, respectively. F-6 SD Products Corporation (A Development Stage Enterprise) Notes to Financial Statements (4) Income Taxes (Continued) The amount recorded as deferred tax assets as of March 31, 2001 is approximately $3,000, which represents the amount of tax benefit of the loss carryforward. The Company has established a 100% valuation allowance against this deferred tax asset, as the Company has no history of profitable operations. (5) Related parties Counsel to the Company directly owns 100,000 shares of the Company, and indirectly owns 100,000 shares in the Company through the 100% sole ownership of the common stock of another company that has invested in the Company. Also, counsel's adult son, sole Officer and Director of the Company, directly owns 2,020,000 shares in the Company. As discussed in Note 2, the Company extended a loan to a company under common control. Related party balances and amounts for the period ended are as follows: March 31, 2001 (unaudited) September 30, 2000 -------------------- ----------------------- Loan and accrued interest receivable - related party $ 6,747 $ 6,475 ==================== ======================= Accrued expenses - related party $ 0 $ 500 ==================== ======================= Interest earned - related party $ 747 $ 475 ==================== =======================

(6) Going Concern As shown in the accompanying financial statements, the Company incurred a net loss of $21,220 for the period from October 20, 1997 (Inception) through March 31, 2001. The ability of the Company to continue as a going concern is dependent upon commencing operations and obtaining additional capital and financing. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company is currently seeking financing to allow it to begin its planned operations. F-7 Item 6. Management's Discussion and Analysis or Plan of Operation. Plan of Operations Since its inception, the Company has conducted minimal business operations except for organizational and capital raising activities. The Company has not realized significant revenues since its inception due to the fact that its key executive, Mr. Mintmire, until his graduation in August 1998, had been enrolled as a full-time college student in the Masters of Business Administration program at Georgia State University, in Atlanta, Georgia. As a result, from inception (October 20, 1997) through March 31, 2001, the Company had only interest income of $1,444 from a loan to a related party. Total Company operations and operating expenses as of March 31, 2001 were $22,664. The Company proposes to engage in the business of automobile lease financing/funding. Mr. Charles Adams, consultant to the Company, agreed to develop the automobile lease financing/funding business for the Company for the following, among other, reasons: (i) because of his belief that a public company could exploit its talents, services and business reputation to commercial advantage and (ii) to observe directly whether the perceived advantages of a public company, including, among others, greater ease in raising capital, liquidity of securities holdings and availability of current public information, would translate into greater profitability for a public, as compared to a locally-owned lease finance/funding company. If the Company is unable to generate sufficient revenue from operations to implement its expansion plans, management intends to explore all available alternatives for debt and/or equity financing, including but not limited to private and public securities offerings. Depending upon the amount of revenue, if any, generated by the Company, management anticipates that it will be able to satisfy its cash requirements for the next approximately six (6) to nine (9) months without raising funds via debt and/or equity financing or from third party funding sources. Accordingly, management expects that it will be necessary for the Company to raise additional funds in the next six(6) months, if only a minimal level of revenue is generated in accordance with management's expectations. Mr. Adams, at least initially, will be solely responsible for developing the Company's automobile lease finance/funding business. However, at such time, if ever, as sufficient operating capital becomes available, management expects to employ additional staffing and marketing personnel. In addition, the Company expects to continuously engage in market research in order to monitor new market trends, seasonality factors and other critical information deemed relevant to the Company's business. In addition, at least initially, the Company intends to operate out of the home of Mr. Mintmire. Thus, it is not anticipated that the Company will lease or purchase office space or computer equipment in the foreseeable future. The Company may in the future establish its own facilities and/or acquire computer equipment if the necessary capital becomes available; however, the Company's financial condition does not permit management to consider the acquisition of office space or equipment at this time. Financial Condition, Capital Resources and Liquidity For the Six Months ending March 31, 2001 At March 31, 2001, the Company had assets totaling $6,990 and liabilities of $5,000. The Company's total assets are primarily attributable to interest income from a loan to a related party. The Company's total liabilities are attributable primarily to accrued legal expenses, organization expenses and professional fees. Since the Company's inception, it has received $23,000 in cash contributed as consideration for the issuance of shares of Common Stock. It's working capital is presently minimal and there can be no assurance that the Company's financial condition will improve. The Company is expected to continue to have minimal working capital or a working capital deficit as a result of current liabilities. Even though management believes, without assurance, that it will obtain sufficient capital with which to implement its business plan on a limited scale, the Company is not expected to continue in operation without an infusion of capital. In order to obtain additional equity financing, management may be required to dilute the interest of existing shareholders or forego a substantial interest of its revenues, if any. The Company has no potential capital resources from any outside sources at the current time. In its initial phase, the Company will operate out of the facility provided by Mr. Mintmire. Mr. Adams will begin by finding clients for the Company and instructing Mr. Mintmire in the operation of an automobile lease financing/funding business. To attract clients, Mr. Adams and Mr. Mintmire will visit potential clients in order to determine their lease financing needs. The Company will place advertising in local area newspapers in Palm Beach County to directly solicit prospective sub-prime and/or credit impaired auto buyers. In the event the Company requires additional capital during this phase, Mr. Mintmire has committed to fund the operation until such time as additional capital is available. The Company believes that it will require six (6) to nine (9) months in order to determine the market demand potential. The ability of the Company to continue as a going concern is dependent upon its ability to obtain clients who will utilize the Company's automobile lease financing/funding programs and whether the Company can attract an adequate number of direct clients who will qualify for a lease financing program. The Company believes that in order to be able to expand its initial operations, it must rent offices in Palm Beach County, hire clerical staff and acquire through purchase or lease computer and office equipment to maintain accurate financial accounting and client data. The Company believes that there is adequate and affordable rental space available in Palm Beach County and sufficiently trained personnel to provide such clerical services at affordable rates. Further, the Company believes that the type of equipment necessary for the operation is readily accessible at competitive rates. To implement such plan, the Company has initiated a Form SB-1 public offering pursuant to Rule 415 under the Securities Act of 1933. It intends to initiate a self-underwritten sale,at an offering price of $1.00, of a minimum of 100,000 shares and a maximum sale of 1,000,000 shares. The offering is being made on a self-underwritten basis by us through our only principal, Mark A. Mintmire, without the use of securities brokers. All proceeds from the sale of shares will be held in an attorney escrow account maintained by Duncan, Blum & Associates, Bethesda, Maryland. Net Operating Losses The Company has net operating loss carry-forwards of $4,300 expiring at September 30, 2021, $6,000 expiring at September 30, 2020, $4,400 expiring at September 30, 2019 and $6,500 expiring at September 30, 2018. The Company has a $3,000 deferred tax asset as of March 31, 2001, resulting from the loss carry-forwards, for which it has established a 100% valuation allowance. Until the Company's current operations begin to produce earnings, it is unclear as to the ability of the Company to utilize such carry-forwards. Year 2000 Compliance The Company did not experience a negative impact to its technology infrastructure as a result of the Year 2000. The Company does not anticipate that it will experience any material disruption in its operations as a result of the Year 2000 changeover in the future. Forward-Looking Statements This Form 10-QSB includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included or incorporated by reference in this Form10-QSB which address activities, events or developments which the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), business strategy, expansion and growth of the Company's business and operations and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions as well as expected future developments and other factors it believes are appropriate in the circumstances. However, whether actual results or developments will conform with the Company's expectations and predictions is subject to a number of risks and uncertainties, general economic market and business conditions; the business opportunities (or lack thereof) that may be presented to and pursued by the Company; changes in laws or regulation; and other factors, most of which are beyond the control of the Company. Consequently, all of the forward-looking statements made in this Form 10-QSB are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking statements. PART II Item 1. Legal Proceedings. The Company knows of no legal proceedings to which it is a party or to which any of its property is the subject which are pending, threatened or contemplated or any unsatisfied judgments against the Company. Item 2. Changes in Securities and Use of Proceeds None Item 3. Defaults in Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders. No matter was submitted during the quarter ending March 31, 2001, covered by this report to a vote of the Company's shareholders, through the solicitation of proxies or otherwise. Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) The exhibits required to be filed herewith by Item 601 of Regulation S-B, as described in the following index of exhibits, are incorporated herein by reference, as follows: Exhibit No. Description -------------- ----------------------------------------------------- 2.1 SB-1 Registration Statement(1) 3.(i).1 Articles of Incorporation of SD Products Corp. filed October 20, 1997(2) 3.(i).2 Articles of Amendment to the Articles of Incorporation of SD Products Corp. filed April 30, 1999(2) 3.(ii) Bylaws of SD Products Corp.(2) ---------------------------------

(1) Incorporated herein by reference to the Registration Statement on Form SB-1 and Amendments thereto of SD Products Corp.(Registration No. 333-36966), filed with the U.S. Securities and Exchange Commission on May 12, 2000. (2) Incorporated herein by reference to the Registration Statement on Form 10-SB of SD Products Corp.(File No. 0-26021), filed with the U.S. Securities and Exchange Commission on May 11, 1999. (b) No Reports on Form 8-K were filed during the quarter ending March 31, 2001, covered by this Report on Form 10-QSB. SIGNATURES ---------- In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SD Products Corp. (Registrant) Date: May 11, 2001 BY: /s/ Mark A. Mintmire ----------------- --------------------------------- Mark A. Mintmire President In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date Signature Title May 11, 2001 BY: /s/ Mark A. Mintmire ------------------ --------------------------- Mark A. Mintmire President, Secretary, Treasurer, Director

S D PRODUCTS INC 10-Q